Facebook rivals ordered to accept settlement

June 27, 2008 — 9.52pm

Facebook's long and embarrassing legal tussle with three men who accused founder Mark Zuckerberg of stealing their social networking concept may soon end, now that a judge has ordered the parties to accept the settlement they reached.

US District Court Judge James Ware in San Jose ordered the plaintiffs, former Harvard University classmates of Zuckerberg, to honor the settlement of undisclosed cash and Facebook stock they agreed to in February.

Divya Narendra and twins Tyler and Cameron Winklevoss had sued, alleging that Zuckerberg stole their idea after they hired him to work on a Web site that eventually became ConnectU while they were all Harvard undergraduates.

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Zuckerberg started Facebook in February 2004 shortly after abandoning his work for the trio, according to court documents. He dropped out of Harvard a few months later and moved Facebook to Silicon Valley.

Zuckerberg and the three men reached a settlement, but the ConnectU founders later balked, accusing Zuckerberg and other Facebook officials of lying to them about the value of the company, which boasts 80 million users worldwide.

The judge didn't disclose the board's valuation in the order he issued Wednesday night. He only said it was "a different value" than the previously disclosed one made in October when Microsoft Corp. invested $US240 million for a 1.6 per cent stake in Facebook, which implied a $US15 billion valuation. Facebook is privately held.

Zuckerberg is now believed to be worth $USUS1.5 billion, based on his Facebook holdings, according to Forbes magazine's rankings of the world's richest people. At 24, he is the youngest person on the list.

Ware said he didn't find that Facebook made any misrepresentations during settlement negotiations and noted the trio are "sophisticated business parties who were represented by reputable counsel."

In April, ConnectU fired one of the law firms representing it, according to court documents. The law firm, Quin, Emanuel, Urquhart, Oliver & Hedges, filed court papers April 24 claiming part of the settlement for unpaid attorney fees.

A Quin attorney didn't return a telephone call. A spokeswoman for ConnectU's current law firm declined comment.

Facebook said in a statement that three ConnectU founders suffered from "buyer's remorse" and that it believed it was "caught in the middle of a fee dispute between ConnectU's founders and its former counsel."

The judge ordered a final hearing July 2 to consider any objections and to figure out how to carry out the settlement.